Weighing the Options of Refinancing
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In the market for a mortgage? We will be glad to assist you! Give us a call today at (207) 571-8034. Want to get started? Apply Now.
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Have you ever heard the old rule of thumb that states you should only refinance if the new interest rate will be at least two points below your present rate? That might have been good advice a while back, but as refinancing has been costing less over the last few years, it's a good time to consider a new mortgage! Refinancing has a number of advantages that often make it worth the initial cost several times over.
Advantages
When you refinance, you could be able to lower your interest rate and monthly payment , perhaps by a lot. Additionally, you might have the option of tapping into your home equity by "cashing out" a sum of money to renovate your home, consolidate debt, or plan a special vacation. With lower interest rates, you may also get the chance to build up home equity more quickly by changing to a shorter-term loan.
Fees and Expenses
All of these benefits do come with some expense, though. With your refinance, you are paying for many of the same things you paid for during your current mortgage loan. Included in the list might be an appraisal, underwriting fees, lender's title insurance, settlement costs, and other expenses.
Do the Math
You might investigate paying points to receive a lower interest rate. Your savings over the life of the mortgage loan may be significant if you have paid up front about 3% of the new loan balance. We recommend that you talk to a tax professional before acting on hear-say that the points paid can be deducted on your federal income taxes.
An additional cost that borrowers might take into account is that a lower rate of interest will lower the interest amount you will be able to deduct from your taxes. Call us at (207) 571-8034 to help you do the math.
In the end, for most people the amount of up-front costs to refinance are paid back soon in savings each month. We will work with you to figure out which mortgage program is best for you, taking into account your cash on hand, the likelihood of selling your home in the near future, and the effect refinancing might have on your taxes. Call us at (207) 571-8034 to get you started.
Want to know more about refinancing? Give us a call: (207) 571-8034.